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The Role of Money in Explaining Business Cycles for a Developing Economy: The Case of Pakistan

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  • Ahmed, Shahzad
  • Pasha, Farooq

Abstract

In this paper, we establish the empirical linkages between nominal and real variables of Pakistani economy using both annual and quarterly data. The focus of our empirical analysis has been limited to the post financial liberalization period starting in early 1990s. Furthermore, this paper theoretically evaluates the role of money and monetary policy in propagating business cycle fluctuations of Pakistani economy using different ways of introducing the role of money via money in utility (MIU) and cash in advance constraint (CIA) as well as with different formulation of monetary policy either through a money growth rule or Taylor type interest rate rule.

Suggested Citation

  • Ahmed, Shahzad & Pasha, Farooq, 2014. "The Role of Money in Explaining Business Cycles for a Developing Economy: The Case of Pakistan," MPRA Paper 55262, University Library of Munich, Germany, revised 11 Apr 2014.
    • Handle: RePEc:pra:mprapa:55262
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    Cited by:

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    3. Aadil Nakhoda, 2014. "The Influence of Industry Financial Composition on the Exports from Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 10, pages 21-49.
    4. Shahzad Ahmad & Adnan Haider, 2019. "An evaluation of the forecast performance of DSGE and VAR Models: The case of a developing country," Business Review, School of Economics and Social Sciences, IBA Karachi, vol. 14(1), pages 28-52, January-J.

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    More about this item

    Keywords

    General Equilibrium Models; Modeling and Simulations; Monetary Policy;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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